What is the difference between a call center and a BPO, KPO organization ?

What is the difference between a call centre and a BPO organization?

A Business Process Outsourcing (BPO) organisation is responsible for performing a process or a part of a process of another business organisation; outsourcing is done to save on costs or gain in productivity.

A call centre performs that part of a client's business which involves handling telephone calls. A call centre, for example, might handle customer complaints coming in over a telephone.

Thus, a call centre can be considered a BPO organisation. The converse is, however, not true because there exist BPO organisations, such as medical transcription agencies, which handle their business through websites, and do not process any telephone calls on behalf of their clients. 

Key Difference: BPO is the business that focuses on tasks, ranging from manufacturing products to providing customer care. On the other hand, a call center is the subset of BPO and mainly focuses on telephone calls.

BPO and call centers are often used interchangeable, but in reality there is a profound difference. Let’s get a brief knowledge on both the terms: BPO and call centers.

BPO, short for Business Processing Outsourcing, is the business that focuses on tasks, ranging from manufacturing products to providing customer care. It usually consists of the back office or front office operations. It is a process where number of people are working for a specific business. 

It is originally associated with the firms' production of goods for use or sale using labor and machines, tools, chemical and biological processing, or formulation, such as Coca Cola that outsourced large sections of its supply chain.

The trend started in the late eighties when businesses sent parts of their processes to be completed in foreign countries. It is helpful for those who are under-graduate or graduate and are not able to be employed in any company. 

If one has skill, he will definitely be employed in a BPO. Nowadays, it has become a fashion or trend for youngsters in some countries to work in BPOs just for time pass. Data entry, call centers are some examples of BPO operations.

On the other hand, call center is the subset of BPO. It is an office which mainly focuses on telephones calls. They receive or transmit large amount of requests by telephone in which one side is a receiver and the other side is a transmitter. Its purpose is to solve queries of the customers related to the particular company, brand, etc.

In addition to a call center, a company handling letter, fax, emails or some software is known as a contact center. Its a workstation where all the employees or workers need a computer and headsets through which they will be connected to the receiver calls and will be able to answer them. The calls can be consisting of telemarketing, survey generation, customer support, taking orders, and many other functions.

Thus, the call centers can be considered as BPO organization, however, this is not true because there are some BPO organizations which handle their businesses through websites, and they do not need to process telephone calls on behalf of their clients.

  

The key differences are listed in the table below:

	BPO	Call Center
Actual Work	A BPO is responsible for performing a process of another business organization.	A call center performs that part of a client's business which involves handling telephone calls.
Requires	Good communication skills and computer knowledge	Basic computer knowledge and fluently speak in any language
Services	Higher services than call centers	Lower services than BPO
Performs	One or two business operations of an overseas company	Work done over telephone lines

Redefining Business Process Outsourcing

For many years, businesses have approached business process outsourcing as a simple cost play - valuable, but limited in impact. A more structured approach is now emerging that infuses key business activities with technology levers to help organizations more precisely manage rule-based tasks and continuously increase process effectiveness and efficiency

When most companies think about business process outsourcing (BPO), they rarely think about process optimization. They reflexively engage in tactical thinking. Perhaps it's a provider moving routine work offshore, taking over system management or leveraging economies of scale in procurement. 

These “better, faster, cheaper” projects have their place in keeping the business trim – but they are not transformative initiatives that help organizations thrive in times of change. It's time for a wider definition of BPO.

Fortunately, BPO is becoming more focused on process optimization. Known as business process services, or BPS, this new approach marries the process and technology smarts of the latest reengineering and algorithmic thinking with the domain smarts of the people who run them.

It covers everything from simple task–based processes (such as payment processing or document management), all the way up to the knowledge–intensive, industry–specific processes that traditional BPO doesn't usually touch.

With BPS, the initial cost savings are dramatic, but the benefits go beyond the usual techniques of offshore labor and technology automation to the introduction of better skills and industry knowledge, new technology and re–engineered/optimized processes. 

On the other hand, core BPO may stop at initial cost savings, without any investment in wholesale changes to the way activities things are done. In an accounting engagement, for example, BPS can focus not just on continuous improvement, but also on generating value through working capital management, reducing days sales outstanding (DSO) and identifying possible fraud scenarios, among other high priorities.

Quick Take: Transforming Accounts Payable at a Strategic Level

To get an idea of how a BPS initiative works, consider our engagement with Jewson, part of Saint–Gobain and one of the world's most recognized construction industry companies. Over three years, we transformed Jewson's accounts payable processes using a range of approaches in concert: labor arbitrage, implementation of new technology systems (such as call management tools, OCR systems and data entry tools) and complete process realignment.

When business practices, technology and customer needs are changing so rapidly, your success – even survival – depends on making sure that your business is keeping pace. But since business resources are limited, those companies that resolutely focus on what their customers are demanding, continually innovating, are the ones that get ahead.

Anything that doesn't contribute to your customer obsession is a candidate to be outsourced. To be certain of quality delivery, you need to carefully select your partner. In our experience, an effective 

BPS provider will do the following:

Engage with you at a strategic level and collaborate with you over the long term, to take on processes that can be better delivered externally.

Take ownership of your processes, end to end, understanding how each process contributes to the business in the context of your particular industry.

Invest in continual improvement of service delivery and management, through innovative mixes of people, process and technology to deliver the service at hand.

Show you tangible results – both with cost savings and real enhanced revenue streams – and will be happy to bet on those results with gainsharing terms in their contracts.

  

KPO vs BPO: Difference between KPO and BPO

With the global outsourcing sector showing steady growth, despite the looming slowdown, there have been many KPO and BPO units coming up especially in the developing nations. For a layman, both seem one and the same thing but in reality there is profound difference in KPO and BPO. Let us first define both the terms.

What is BPO? 

Business Process Outsourcing or BPO is outsourcing of some of the business functions to a third party in order to save money. It usually consists of the back office or front office operations. While front office services are related to client interaction and customer support, back office services are related to finance and HR. If outsourcing is done to a company situated outside the parent company's country, it is known as offshore outsourcing.

What is KPO? 

Knowledge Process Outsourcing or KPO is a subset of BPO. KPO involves outsourcing of core functions which may or may not give cost benefit to the parent company but surely helps in value addition. The processes which are outsourced to KPOs are usually more specialized and knowledge based as compared to BPOs. Services included in KPO are related to R&D, Capital and insurance market services, legal services, biotechnology, animation and design, etc. are the usual activities that are outsourced to KPOs. LPO or Legal Process Outsourcing is special type of KPO dealing with legal services.

Difference between BPO and KPO, which one is better? 

As we saw earlier, BPOs usually deal with fringe business activities such as customer care, finance and HR and at the same time, the USP of a BPO is their being cost effective. Companies usually outsource such processes to BPOs which are not directly linked to its value chain. And the motive behind such outsourcing is directly linked to cost reduction. 

On the other hand, highly specialised and knowledge based services are outsourced to KPOs. These activities are directly related to core offering of parent company. The motive behind such outsourcing is not only to reduce cost but to get specialised solutions for which availing in-house resources might be tough.

The difference in BPOs and KPOs can also be judged by the way they hire people. While basic education may be enough for you to get a BPO job but a KPO job requires you to be competent in a particular field. Also, the training provided by the KPOs is more rigorous and sector specific. So if you are a 'Jack of all trades', KPOs may not be the right choice for you.

Even businesses outsourcing their services to KPOs do a more extensive research before giving a contract to a particular KPO, as a good KPO can be the differentiating factor between a good market offering and a bad one.

So if you compare the functionalities and expertise involved, KPOs are far better than BPOs, but both of them help businesses to streamline their operations and making them cost effective.

Why KPOs are emerging at a rapid pace now? 

1) Lack of highly qualified professionals in developed countries.

2) BPOs are shifting further east to Philippines and Bangladesh, thus India is exploring KPOs as the next big thing for them.

3) As the US Government is taking steps to reduce outsourcing, BPO will get hit the most, unlike skill based KPOs.